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OC’s 3rd Largest City Seeing Heavy Interest From Apartment Developers

Despite recent signs of a slowdown in rents, multifamily development continues to move forward in Orange County, with nearly 4,000 units delivered across the county as part of large apartment projects since the start of 2022.

Santa Ana was at the receiving end of much of that activity, with roughly 1,900 units delivered in the city during that time frame, factoring in apartment projects with at least 100 units.

OC’s third-largest city saw the ninth-biggest boost in multifamily housing units of any city in California last year, according to May estimates from the California Department of Finance.

The recent additions, along with other big projects in the works, could help stem the tide in the city, which last year saw its population fall under 300,000 for the first time since the mid-1990s, according to state figures.

Santa Ana’s 4,628 drop in estimated population last year was the most of any city in California with a population under 300,000, according to the state’s May figures, which counted 299,630 residents in Santa Ana.

Catalyst for Growth

Santa Ana has been a strong proponent of new apartment development in recent years, with developers able to tap underutilized office and industrial sites, as well as vacant land, to add housing to once commercial-heavy corridors.

“Santa Ana has a lot of vacant land and old industrial land, and the city recognized new apartment developments could be a catalyst for economic growth,” said John Drachman, co-founder of Newport Beach developer and investor Waterford Property Co.

“The city was open to new development, and they viewed multifamily as the highest and best use,” he said.

Projects include developments from several companies new to the city, as well as from longtime area developers such as Mike Harrah’s Caribou Industries and Related Companies of California.

Santa Ana’s demographics, history and transportation investments—like the OC Streetcar—have bolstered development interest, according to Harrah.

“Santa Ana has seen continued upward trending growth in its focus on affordable residential and luxury living in its diverse city core,” said Harrah, whose local development projects include 888 on Main, an adaptive reuse project that sold in 2020 to Alliant Strategic for $54 million.

Despite cooling housing metrics seen in recent months, the influx of units has done little to lower asking rents that have been rising over the past decade (see story, page 19).
Santa Ana Boost

Cities that are more collaborative with apartment developers, like Santa Ana, are expected to continue to receive higher-than-average boosts in inventory in the next few years, real estate execs say.

Santa Ana has 1,627 units under construction, the most of any city and ahead of Irvine, which has 1,543 units underway, according to CoStar Group Inc.

The city is home to the largest apartment project to deliver since the beginning of 2022, and is also home to the largest project currently under construction in the county.

In January, developer Wermers Properties delivered the 603-unit Park on First apartment complex on 6 acres in the Prentice Park neighborhood, adjacent to the Santa Ana Zoo. The project is already more than 80% occupied, with rents for a two-bedroom unit running around $3,244 per month, according to data from CoStar.

“We are not only providing new housing and commercial opportunities for the community, but we are honored to participate in the rich history of the city of Santa Ana and the renewal of the Prentice Park neighborhood,” Tom Wermers, CEO of Wermers Properties, said in a statement.

In June 2022, Greystar Real Estate Partners began construction on the largest apartment project currently underway in Orange County: Warner, a 1,100-unit apartment project at 2320 Redhill Ave. on a 15-acre parcel previously used by Ricoh Electronics.

That project, which will also include 80,000 square feet of commercial retail and restaurant space, is expected to deliver by next March.

The second-largest apartment project on the books in Santa Ana is also preparing to break ground.

In September, Costa Mesa-based Arnel & Affiliates sold one of its long-standing Santa Ana development sites for $51 million to San Diego-based Ledcor Group.

Arnel, the development and investment company founded by the Argyros family in the late 1960s, previously owned the former agricultural site at 1801 E. Fourth St.—located close to the 16-story office tower previously known as the Xerox Centre—for more than three decades.

Waterford Group partnered with Arnel as a fee development partner in 2018 to head the entitlement process for the redevelopment; it won approvals in 2021 for a 644-unit apartment project with some ground-floor retail space and about 1,400 parking spaces.

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